As 2014 is drawing to a close this PRSupdate article will focus on what has been happening over the past 12 months in housing and the Private Rented Sector, as well as a brief look ahead to 2015.

House Building

While the lack of housing stock is a current hot topic it has been encouraging to see statistics, released by the Government, which shows that house building has steadily been on the rise since the financial collapse of 2008.

The number of private dwelling construction starts for 2014 is set to exceed the 2013 levels by at nearly 25,000 units (106,750 in 2014 compared to 81,980 in 2013).

From yesterday a landlord (or their lettings agent) who lets out property in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton will need to conduct ‘right to rent’ checks. This new initiative is part of the new Immigration Act 2014 and failure to comply – and thus let to a tenant who has no right to be in the UK – will result in a £3,000 fine per breach.

Sarah Teather’s Tenancies (Reform) Bill is talked down at its second reading

Sarah Teather’s Tenancies (Reform) Bill, dubbed the ‘Revenge Eviction Bill’, has failed to proceed from its second reading in the House of Commons.

During the debate MPs Philip Davies and Christopher Chope decided to ‘talk out’ the Bill so that only 60 MPs managed to vote before time ran out. This stopped the bill from receiving the 100 votes that are required for a motion to proceed.

The bill had received cross-party support but was openly opposed by leading landlord associations, who claimed it could lead to landlords finding it difficult to take back possession of their properties from problem tenants.

A recent survey has made the claim that only 0.5% of the public are aware of the existence of the three Government approved redress schemes.

Since October 1st, a letting agent must legally be a member of one of these schemes to allow renters a recognised and independent route to take any complaint.

The schemes – the Property Ombudsman, Ombudsman Services Property and the Property Redress Scheme – are there to assess tenant complaints and can award compensation where they believe it to be appropriate.

The House of Lords voted against Labour’s call to ban letting agent fees

Labour has been unsuccessful in its attempt to ban letting agent fees.

As we reported yesterday, Labour had pushed to have the Consumer Rights Bill amended to make it illegal for an agent to levy fees against a prospective tenant.

The amendment was defeated by 45 votes.

This was not the first attempt by Labour to use the Consumer Rights Bill to ban letting agent fees. The Shadow Housing Minister, Emma Reynolds, has stated that it is their intent to push through the ban on fees (among other things) should Labour be voted into power in 2015.

The House of Lords will be in session today and on the agenda will be a discussion of various amendments to the Consumer Rights Bill, some of which could massively affect how letting agents operate.

Letting Agent fees and Client Money Protection (CMP) requirements are at the forefront of the discussions. The Labour party will be pressing for the Bill to include an amendment that would make it illegal for agents to charge any fees to tenants (like it is in Scotland).

The Government seems to be against such changes and believes that the Bill’s requirement for agents to display all their fees (those charged to both landlords and tenants) to be enough.

Dominic Martin, Former Member of the Department For Communities & Local Government’s Private Rental Sector (Residential) Taskforce

Introduction

New Investment Market & Data:
The UK is witnessing the emergence of a specifically designed and managed ‘institutional grade’ residential asset class, loosely referred to as the new Private Rented Sector (PRS), or as Build-to-Rent. However, for any investor, be this institutional, private equity, sovereign wealth funds or housing associations, there is a need to underpin entry into this sector with good quality data and analysis.

Therefore, this article looks to acknowledge some of the existing sources of data and provide commentary around these. Secondly, it highlights areas where improvement can be gained.

Investment Asset Performance:
In the medium to long-term, the aspiration from an investment performance perspective is that this market resembles the US ‘multi-family housing’ market (MFH), where detailed accounts of the performance of the investments are standard in any investment particulars. Investors need certainty around the investment performance of this asset class. This will comprise both the annual net returns (i.e. income less annual maintenance and management costs) and total long term returns (driven by either yield compression and/or House Price Inflation).

Following a request by SAFE Agent, urging the Government to amend the Consumer Rights Bill to include mandatory membership to a Client Money Protection (CMP) scheme for all lettings and management agents, the Housing Minister, Brandon Lewis, has responded by stating that he has “…no plans to make CMP compulsory.”

A statement released on the SAFE Agent website, by John Midgley the Chair of SAFEagent, stated: “We are disappointed and will continue with our campaign…”

The UK’s housing crisis should not be understated. Not only does it represent one of the biggest potential drivers of inequality in the UK, but failure to address it could sabotage the UK’s economic recovery.

Increasing housing supply tops the priority list of all the major political parties, with the challenge – as set out recently by Labour – is to build 200,000 homes a year, across all tenures, by 2020. In any event, an overall shortfall will persist for another 10 years or more.

The Private Rented Sector (PRS) is clearly an important part of the supply side solution, both in terms of additional housing stock and affordability. The lack of mortgage lending at higher loan-to-value (LTV) levels is reducing the accessibility to ‘buy to occupy’ at a time when the growing population is continuing to put pressure on the chronically undersupplied housing market.

We are regularly in conversation with a plethora of leading figures in the property, investment, finance and charity sectors, many of whom are guest authors for PRSupdate. The purpose of this feature is to get them to discuss the topics and issues that are currently affecting the Private Rented Sector.

Residential developers who build for sale have, for many years, voiced consistent concerns about the length of time it often takes to navigate the planning system and achieve the consent required to build much needed homes. Inefficiencies in the processing and determination of applications can result from a lack of resources or experience at officer level.

There is frequently a lack of political will or leadership to help communities understand the need for more homes to be built in their locality and the wider social and economic benefits which will result. Each local authority has different policies and there is a frequent tendency to apply planning law and national policy in a different way.

Young London are pleased to announce that we have received London Rental Standard accreditation.

As an accredited letting and managing agent our applicants, residents and clients can enjoy peace of mind knowing that they’re dealing with an agency that fully complies with the law and offers a good service.

The London Rental Standard, a voluntary set of minimum standards, was created by the Mayor of London (Boris Johnson) to set out the level of service that those operating in London’s Private Rented Sector are expected to adhere to.

The emergence of a significant Private Rented Sector (PRS) development and funding market has been driven initially by the public sector through various initiatives, including the formation of the Government PRS Taskforce and followed closely by investors.

These early investors included M3 Capital Partners, M&G, Apollo, Grainger, AGP, Qatari Diar, Akelius, Oaktree and Sigma, with many following suit in the last 12 months. On a monthly basis new investors are entering this market with c£500m to invest, all seeking PRS developers and suitable investment opportunities in the UK’s top 35 cities.

On September 10th the property industry’s best and brightest descended upon the Welsh countryside to attend the UK’s biggest property event, RESI 2014.

Once again we had more than 1,000 delegates in attendance networking, discussing the current state of the residential property sector and enjoying a full conference programme of opinion and debate, Chaired by Mark Eason, the BBC’s Home Editor.

Leading developers, researchers, financiers and politicians took to the stage to talk about the key issues facing the sector and I have collated some of the biggest talking points to come out of this year’s conference.